Inappropriate billing by nursing homes wastes more than a billion each year

The United States is currently facing an economic crisis due to an alarming discrepancy between revenues and expenditures. Contributing to the shortfall is unnecessary expenditures in government programs such as Medicare. According to a new report by the US Department of Health and Human Services (HHS), which was released on November 13, hundreds of nursing homes overcharge Medicare annually for skilled services that are unnecessary; furthermore, inflation of the charges is commonplace. The result is an added cost of $1.5 billion in annual costs to Medicare.

The report by the staff of Inspector General Daniel R. Levinson found that approximately 25% of Medicare bills from nursing homes that the staff examined were incorrect. The majority of these claims involved so-called upcoding, where a nursing home or other provider inflates the cost of its bill to Medicare by claiming more intensive services were done than actually performed. In other cases, the investigators found that nursing homes provided treatments that were inappropriate.

Documents reveal that the nursing homes billed for high-intensity services, such as speech therapy and occupational therapy, which were provided to patients who could not benefit from them. One patient under hospice care refused physical therapy; however, received it anyway, and Medicare was billed.

Skilled nursing homes provide services such as physical, occupational and speech therapy, as well as assistance with activities of daily living such as eating and bathing. The newly-released report is a component of a years-long initiative by HHS to curb costs at the 15,000 nursing homes that provide skilled nursing; in fiscal 2012, these facilities received $32.2 billion in federal funds.

Advertisement

Currently, the nation’s lawmakers are searching for methodologies to curb the rising cost of entitlement programs such as Medicare and Medicaid. In 2011, Medicare, which insures seniors and disabled individuals, accounted for 13.5% of federal spending, according to figures from the nonpartisan Congressional Budget Office. That percentage is predicted to increase over the next decade. Federal officials stress that reducing fraud, waste and abuse in Medicare is a key component of reducing the program's spending. As of July 2012, the administration had recovered $3.7 billion in fraudulently obtained healthcare money over three years.

In producing their report, the federal inspectors focused on a randomly selected sample of 499 claims submitted by 245 nursing facilities around the US. The report did not name the facilities. Some of the report’s recommendations were that the government change the methods used for determining how much therapy is needed, increase and expand reviews of claims from nursing facilities, and strengthen monitoring of facilities that have billed for inappropriate expenses, among other things. Depending on the type of services given to a skilled-nursing patient, Medicare paid between $214 and $623 per patient per day in 2009 (the year sampled by the auditors from the Office of Inspector General). The auditors noted that theirs findings apply to the way Medicare currently handles billing. They explained that Medicare “has made several significant changes” However, they added that “more needs to be done to reduce inappropriate payments.”

The investigators found several examples where nursing homes provided more therapy during the period on which bills were based than they did during other times of treatment. In one example, the report noted that a nursing facility said it provided 90 to 110 minutes of therapy daily during the “look-back period” on which bills were based; however, only half that amount at other times.

The Office of Inspector General notes that it will continue to scrutinize Medicare reimbursement. They have termed the endeavor “Operation Vacuum Cleaner.”